2003 CL D 1171
Before Talaat Qayyum Qureshi, J
UNITED BANK LIMITED through manager—Petitioner
Civil Revision No.340 of 1996, decided on 24th March 2003.
Financial Institutions (Recovery of Finances) Ordinance (XLV of 2001)—
—-S.9—Civil Procedure Code (Vof 1908), S.9—Suit for recovery of damages by the customer against Bank on the grounds that he had applied for grant of loan of Rs.5,00,000 but he was given a sum of Rs.2,56,000; that he had spent Rs.10, 000 for execution of documents in favour of the Bank and a huge amount for ensuring his factory;that although the Bank Authorities had verbally agreed to disburse the remaining amount of Rs.2,85,000 as I.D.A. loan but thereafter they did not sanction the said amount and that due to non-disbursement of the said amount, the plaintiff had sustained damages amounting to Rs.5,00,000– Maintainability—Customer or a financial institution committing default in fulfilment of any obligation with regard to any finance, a financial institution or, as the case may be, the customer could institute a suit in the Banking Court under S.9, FinancialInstitutions (Recovery of Finances) Ordinance, 2001—Civil Court had nojurisdiction to entertain a suit for recovery of damages filed by the borroweragainst a Banking Company as it was the exclusive jurisdiction of the SpecialJudge Banking Court to adjudicate upon the matter.
Mst. Yasmin Neghat and others v.National Bank of Pakistan and others PLD 1988 SC 391; Messrs Grainsystems(Pvt.) Limited and 10 others v. Agricultural Development Bank 1993 SCMR 1996; Haji Nabiullah and others v. H.B.L. and 2 others PLD 1990 Pesh. 17; MessrsShafiq Hanif (Pvt.) Limited, Karachi v. Bank of Credit and CommerceInternational (Overseas) Limited, Karachi PLD 1993 Kar. 107; State Bank of Pakistan v. Chiragh Sun Engineering Limited and another 2000 YLR 1198; MuhammadNazir Afandi v. IDBP and 3 others PLD 1992 Pesh. 87 and Qayum Nawaz Khan and another v. The Regional Manager, Agricultural Development Bank of Pakistan, Dera Ismail Khan, and 4 others PLD 1997 Pesh.72 ref.
Aamer Javed for Petitioner.
Mian Muhibullah Kakakhel forRespondent.
Date of hearing: 24th March 2003.
Karim Dad respondent/plaintiff filed suit for recovery of damages of Rs.5,00,000 against Messrs United BankLimited in the Court of learned Senior Civil Judge, Mardan. The said suit was resisted by the petitioner/defendant by filing a written statement. The learned trial Court passed ex parte decree against the petitioner/defendant vide judgment and decree dated 2-2-1989 reeling aggrieved with the said judgment and decree, petitioner filed Appeal No.53/13 in the Court of learned AdditionalDistrict Judge, Mardan, which was accepted, ex parte judgment and decree dated2-2-1989 passed by the learned trial Court was set aside and the case was remanded back to the learned Senior Civil Judge, Mardan to decide the same afresh vide judgment and decree dated 24-3-1996. Messrs U.B.L., the petitioner being not satisfied with the remand order has filed a revision petition in hand.
2. Mr. Aamer Javed, the learned counsel representing the petitioner argued that the Civil Courts had no jurisdiction to entertain the suit filed by the respondent/plaintiff and it was the exclusive jurisdiction of the Special Judge Banking to entertain such a suit. The Courts below failed to appreciate the said legal position.
3. On the other hand Mr. MianMuhibullah Kakakhel. Advocate the learned counsel representing respondent No. 1argued that the respondent/plaintiff had filed suit for recovery of damages and as per Financial Instit0tlons (Recovery of Finances) Ordinance, 2001 it was only the Banking Company which could file a suit for recovery of loans, advances, credits and finance facilities, and the respondent/plaintiff had rightly filed a suit before the learned Senior Civil Judge, who was competent to entertain the same.
4. I have heard the learned counsel for the parties and perused the record.
5. The claim of the respondent/plaintiff is that he had applied for a grant of a loan of Rs.5,00,000but he Wags only given a sum of Rs.2,56,000. He had to spend Rs.10,000 for the execution of documents in favor of the Bank and he also spent a huge amount on ensuring the Factory. Although the Bank Authorities had later on verbally agreed to disburse Rs.2,85,000 as an I.D.A. loan but thereafter they did not sanction the said amount. Due to the non-disbursement of the said amount, the respondent/ plaintiff had’ sustained damages amounting to Rs.5,00,000.
6. The claimed damages were allegedly sustained by the respondent/plaintiff due to non-disbursement of the amount of loan claimed by him. The defense of the petitioner/defendant-Bank was that the respondent/plaintiff had applied for a sum of Rs.2,54,500 as a loan, his application was processed and a sum of Rs.2,50,000 were sanctioned in his favor which was disbursed to him on 15-5-1983. He received the said amount without raising any objection thereon and executed the requisite documents in favor of the Bank. The Bank officials had never agreed or committed to disburse any further amount therefore, the question of sustaining damage to the respondent/plaintiff would not arise at all.
7. The question that requires determination, in this case, is as to whether the Civil Court had jurisdiction to entertain the suit filed by the respondent/plaintiff, the answer to this question is in negative. Examination of provisions of section 6 of the Banking Companies(Recovery of Loans) Ordinance, 1979 (Ordinance XIX of 1979) shows that the jurisdiction of all other Courts in the matter of Banking loans had been ousted and exclusive jurisdiction was conferred on special Courts in respect of matters which were made triable by the said Courts. Under subsection (2)(a) of section 6 of Ordinance XIX of 1979, the jurisdiction of the Special. The court was expressly conferred in relation to cases involving a sum of Rs.1,00,000 or less. The amendment was brought by Ordinance II of 1983. After the amendment under section 5(1) of Ordinance II of 1983 the Special Courts constituted were vested with the jurisdiction to try those cases, which were specially excluded from its jurisdiction under section 6(2)(a) of Ordinance XIX of 1979. As a result of the said extension the Special Courts were conferred with the said jurisdiction in such matters. As per subsection (4) of section 6 of OrdinanceXIX of 1979 all those cases which were to be tried by the learned Civil Court earlier were also to become triable by the Special Courts, hence those suits which were pending in Civil Courts were transferred to the Special Courts. In this regard, judgments of the august Supreme Court of Pakistan in Mst. YasminNeghat and others v. National Bank of Pakistan and others PLD 1988 SC 391 and Messrs Grainsystems (Pvt.) Limited and 10 others v. Agricultural DevelopmentBank 1993 Supreme Court Monthly Review 1996 are very clear.
8. Thereafter, the Banking TribunalsOrdinance of 1984 (Ordinance No. LXIII of 1984) was promulgated for the purpose of loans including finances provided on the basis of participation in the profit and loss, mark-up in price, hire purchase, lease, or otherwise. As per subsection (1) of section 5 of the Banking Tribunals Ordinance, a Tribunal could exercise civil jurisdiction in respect of a claim filed by a Banking Companyagainst a customer in respect of or arising out of finance, provided by it like a Civil Court under Code of Civil Procedure, 1908. Under the Banking TribunalsOrdinance, 1984 the customer/borrower could not file suit for damages etc.before the said Tribunal. It still remained the domain and jurisdiction of the Special Court under Banking Companies (Recovery of Loans) Ordinance, 1979 to entertain such a suit filed by a customer/borrower. Reliance in this regard is placed on Haji Nabiullah and others v. H.B.L. and 2 others PLD 1990 Peshawar 17and Messrs Shafiq Hanif (Pvt.) Limited, Karachi v. Bank of Credit and CommerceInternational (Overseas) Limited, Karachi PLD 1993 Karachi 107.
9. In the year 1997 BankingCompanies (Recovery of Loans, Advances, Credits, and Finances) Act (XV of 1997)was promulgated. According to this Act Special Court, Banking was conferred with the jurisdiction for the case in which the outstanding amount of claim based ora loan or finance did not exceed 30 million rupees and in respect of other cases, the High Court was empowered. Under subsection (4) of section 7 of Act XV of1997 no other Court that a Banking Court could exercise jurisdiction with respect to any matter to which jurisdiction of Banking Court extended. UnderAct XV of 1997 she position did not change. A suit filed for recovery of damages by the customer/borrower remained in the exclusive domain of BankingCourt as is clear from dictum laid down in State Bank of Pakistan v. ChiraghSun Engineering Limited and another 2000 YLR 1198.
10. In order to bring certain modifications and to re-enact the Banking Companies (Recovery of Loans, Advances, Credits, and Finances) Act, 1997 another Ordinance under the name of financial Institutions (Recovery of Finances) Ordinance, 2001 (Ordinance XLV of2001) was promulgated. According to section 9 of ibid Ordinance, a customer or a financial institution committing default in fulfillment of any obligation with regard to any finance, a financial institution, or, as the case may be, the customer may institute a suit in the Banking Court. With the promulgation of this law, the position with regard to the jurisdiction of the Special Banking Court did not change at all.
11. At this stage, a specific question arises as to whether the Civil Court had the jurisdiction to entertain a suit for recovery of damages filed by the borrower against a Banking Company, the answer to this question is in negative. Not only the provisions of subsection(2)(a) and subsection (4) of section 6 of Act XIX of 1979 are clear but the courts established under section 5(1) of Ordinance II of 1983 leave no room to doubt that the Special Courts Banking was the only Court which has jurisdiction to entertain such a suit. A similar question came up for hearing before this court in Muhammad Nazir Afandi v. IDBP and 3 others PLD 1992 Peshawar 87 in which it was held:-
“In this view of the matter, while upholding the findings of the two Courts below that civil Court had no jurisdiction in this matter and that Special Court Bankingwas seized of the jurisdiction, the order of the learned trial Judge affirmed by the learned Appellate Court that plaint should be returned to the plaintiff-petitioner for filing before the competent Special Court, is unexceptionable. This revision petition is, therefore, dismissed. Having regard to the peculiar nature of the controversy the parties are, however, left to bear their own costs:”
A similar view was taken by this court in Qayum Nawaz Khan and another v. The Regional Manager, AgriculturalDevelopment Bank of Pakistan, Dera Ismail Khan and 4 others PLD 1997 Peshawar72 in which it was held:–
“As far asF.A.O. No.4 of 1993 is concerned, the trial Court has also no jurisdiction to entertain the suit with regard to damages which is an off-shoot of the main suit for declaration and which has been returned to the respondent for presentation before the proper forum. Resultantly F.A.O. No.4 of 1993 is accepted, the impugned order dated 11-7-1993 with regard to the finding of the trial Court that the civil Court has got jurisdiction in respect of the relief for compensation for defamation, etc. and permission for the consequential amendment in the plaint, is set aside and the learned trial Court is directed to return the plaint in toto to the respondents for presentation before the proper forum. However, the parties are directed to burden their own costs.”
Similarly in State Bank of Pakistan v. Chiragh Sun Engineering Limited and another 2000 YLR 1198 it was held:–
“The above contention with profound respect to the learned counsel is untenable and does not have the support of the law. Indeed in the prayer clause, respondent No.1 has claimed (a) damages on account of canceled contract in the sum of.11,465,272, (b) damages on account of inability to do business on the annual turnover of Rs.1.2 million in the amount of Rs.84,534,728 and (c) damages on account of wanton and wilful defamation and libel in the sum of Rs.60 million adding up to Rs.,150 million. Apart from the fact that the reliefs under clauses (a) and (b) evidently fall within the exclusive domain of a BankingCourt, the other reliefs seeking, specific performance of contract, mandatory injunction for a refund of a specific amount, declaration that the levy of penalty is illegal, direction to render accounts and different injunctions, seeking to restrain the defendants from recovering money, claiming interest and instituting legal proceedings are also matters within the exclusive jurisdiction of a Banking Court. The claim for damages made by the respondent. 1 is basically founded upon allegations of breach of contract and allegations relating to finance and the claim by way of damages for defamation also relatable to the same. We are, therefore, doubtful if the same could be considered as an independent claim in tort. In any event, a careful reading of the plaint shows that such relief is only ancillary to the main reliefs claimed by the respondent No.1. Moreover, we are quite clear in our mind, upon a plain reading of the Act, 1997 that a person cannot be allowed to seek the ouster of the jurisdiction of an exclusive forum established by law by merely adding a claim in the nature of a tort arising out of legal relationship constituted by a contract for finance facilities. Such an interpretation would obviously obviate one of the main objects of the Act to constitute a special forum for adjudication of disputes between the banks and borrowers/customers.”
Keeping in view the above discussion, I am of the firm opinion that the learned Senior Civil Judge, Mardan had no jurisdiction to entertain the suit filed by the respondent/plaintiff and it was the exclusive jurisdiction of Special Judge Banking to adjudicate upon the matter. I, therefore, accept the revision petition in hand, set aside the impugned judgments and decrees of the Courts below, and remit the case back to the learned Senior Civil Judge, Mardan with the direction to return the same to the respondent/plaintiff for presenting it before the Court of competent jurisdiction. There shall, however, be no orders as to costs.